Alaska Tax Calculator 2026

Alaska Income Tax: None

Alaska is one of only nine states that levies no personal income tax. This applies to all types of income including wages, salaries, investment income, capital gains, and retirement distributions. Alaska has never had a state income tax since gaining statehood in 1959, funding its government primarily through oil revenues and federal transfers.

While there is no state income tax, Alaska residents are still subject to federal income tax and FICA taxes (Social Security and Medicare). The absence of state income tax means Alaska residents keep more of their earnings compared to residents of most other states. For a household earning $150,000, this advantage can be worth $5,000 to $10,000 or more annually compared to living in a state with a 5% income tax rate.

Alaska also does not levy a corporate income tax in the traditional sense, though it does impose a corporate net income tax on corporations with Alaska-sourced income. This tax does not apply to individuals, sole proprietors, or pass-through entities like S-corporations and partnerships.

Alaska Sales Tax

Alaska is one of only five states with no state-level sales tax (along with Delaware, Montana, New Hampshire, and Oregon). However, Alaska is unique among these states in that it allows local governments to impose their own sales taxes. Approximately 100 local jurisdictions in Alaska levy a local sales tax, with rates ranging from 1% to 7.5%. The average local sales tax rate across the state is approximately 1.82% where applicable.

In practice, many populated areas of Alaska do have some local sales tax. Anchorage, the state's largest city, does not have a local sales tax, but the Matanuska-Susitna Borough (the second most populated borough) charges 3%. Juneau, the state capital, charges 5%. Rural communities often rely on local sales taxes as a primary revenue source. There are no uniform exemptions for groceries or other necessities at the local level; each jurisdiction sets its own rules.

Alaska Property Tax

Alaska's effective property tax rate averages approximately 1.04%, slightly above the national average. Property tax is the primary source of revenue for local governments since there is no state income tax or state sales tax. Rates vary widely across boroughs: some rural, unorganized boroughs have no property tax at all, while more developed areas have higher rates.

Alaska offers several property tax relief programs. Senior citizens (65 and older) and disabled veterans can receive a property tax exemption on the first $150,000 of assessed value in most jurisdictions. Some boroughs offer additional exemptions or deferrals. Property is assessed at full fair market value in most jurisdictions, though some allow fractional assessments. The Kenai Peninsula Borough, Municipality of Anchorage, and Fairbanks North Star Borough all have different property tax structures.

Alaska Permanent Fund Dividend (PFD)

The Alaska Permanent Fund Dividend is the state's most unique financial benefit and a major reason Alaska stands out among all 50 states. Established in 1982, the PFD distributes a portion of the state's oil revenue earnings to every eligible Alaska resident annually. The fund itself, the Alaska Permanent Fund, holds over $70 billion in assets invested globally.

To qualify for the PFD, you must have been an Alaska resident for the entire calendar year preceding the application year, intend to remain an Alaska resident indefinitely, and not have been incarcerated for a felony during the qualifying year. The dividend amount varies significantly from year to year. In 2024, the PFD was approximately $1,702 per person. Historically, dividends have ranged from a low of around $878 (in 2012) to a high of $3,269 (in 2022, including a supplemental energy relief payment).

The PFD is subject to federal income tax and must be reported on your federal return. The State of Alaska issues a Form 1099-MISC for each dividend payment. For a family of four, the PFD can represent over $6,000 in annual income. When combined with no state income tax and no state sales tax, this makes Alaska one of the most financially generous states for residents.

Cost of Living Considerations

While Alaska's tax structure is exceptionally favorable, it is important to consider the higher cost of living. Goods, groceries, and services in Alaska are significantly more expensive than the national average due to the state's remote location and transportation costs. Housing costs vary widely: Anchorage is roughly on par with the national average, while rural communities can be extremely expensive. Heating costs are also substantially higher during Alaska's long winters. These factors can offset some or all of the tax savings, depending on your specific circumstances and location within the state.

Alaska vs. Neighboring States

• Washington — Washington also has no income tax but imposes a significant sales tax (averaging 10.25% combined). Washington's property tax is lower at 0.84%. Washington has a much lower cost of living and greater access to goods and services, but Alaska's PFD and lack of sales tax are significant advantages.
• Oregon — Oregon has no sales tax but has a high graduated income tax (up to 9.9%). Property tax is about 0.87%. For high earners, Alaska's lack of income tax is a major advantage over Oregon.
• Texas — Texas also has no income tax but has a 8.20% average combined sales tax and 1.60% property tax. Alaska edges Texas out with no sales tax, the PFD benefit, and lower property taxes, though Texas has a significantly lower cost of living.
• Florida — Florida has no income tax and a 7.05% average sales tax. Property tax is 0.86%. Florida has a much lower cost of living and warmer climate, but Alaska offers the PFD and no sales tax as advantages.